Guarani Indians in southern Brazil have called on Shell to withdraw from their ancestral land, where the oil giant produces ethanol from sugar cane, according to a native rights group.

"Shell must leave our land... The companies must stop using indigenous land," said Ambrosio Vilhalva, a Guarani from the Caarapo municipality in the southern state of Mato Grosso do Sul.

"We want justice, we want our land to be mapped out and protected for us," he was quoted as saying by Survival International, a rights group that campaigns for indigenous peoples.

On the lands in question the Anglo-Dutch Shell has joined with Brazilian biofuel giant Cosan to form the Raizen ethanol project, which makes use of sugar cane grown on the Guarani tribe's ancestral lands.

"Since the factory began to operate (in 2010), all our health has deteriorated -- children, adults and animals," the Indians said in a letter addressed to the companies.

The Guarani believe chemicals used on the sugar plantations cause acute diarrhea in children and have killed fish and plants, including traditional medicinal herbs.

Raizen denied the allegations, saying it was "seeking a consensus in the disputed area of Caarapo."

"Raizen maintains dialogue with all parties, aiming at the sustainable development of the activities of the company," it said in a statement.

Survival International said Brazil has been slow to demarcate and protect indigenous lands from sugar cane growers and that many of the Guarani "live in appalling conditions, in overcrowded reserves or camped on roadsides."

"It's a sad irony that people buy Shells ethanol as an 'ethical' alternative to fossil fuels: theres certainly nothing ethical about its horrendous treatment of the Guarani," the group's director Stephen Corry said.

"The Brazilian government needs to enforce its laws, and stop the wholesale destruction of the Indians' land."

Brazil is the second largest producer of ethanol in the world, behind the United States, and the largest exporter of biofuels.

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